Trade Promotion Marketing and Optimization, with other news and commentary for channel professionals

Saturday, March 03, 2007

Repeal Robinson-Patman?

In 2002, Congress created something called the Antitrust Modernization Commission. The commission was asked to look into antitrust laws and recommend changes.

The final report from the commission is due in April but tentative recommendations have been released, including the following:

ROBINSON-PATMAN ACT 44. Congress should repeal the Robinson-Patman Act in its entirety. 45. [Note: Discussions at the July 26th deliberation meeting proposed this tentative recommendation.] Until Congress repeals the Robinson-Patman Act, courts should interpret the Act to require plaintiffs to make a showing of injury to competition similar to that required under the Sherman Act.

I doubt very much that the new congress, which is very different from the one that crearted the AMC, will do as the commission asks. I also wonder how much it matters.

My own opinion, since you asked, is that Robinson-Patman, flawed as it is, should not be repealed. It should be revised to reflect the realities of the marketplace, however. The most important of these is that market power exists more with the retailer than with the manufacturer, and that R-P should therefore be directed at stopping retailers from demanding market-distorting allowances, rather than at punishing manufacturers for giving into such demands.

I have often argued that R-P is written backward, and is comparable to a bank robbery law saying that it is illegal for banks to allow themselves to be robbed, and that the bank president will be jailed if it happens.